Pour l’obtention du diplôme de Master
Mémoire de fin d’étude
Filière : Génie Industriel
Spécialité : Management Industriel et logistique
Présenté par : KHELIL CHERFI Manal
ALLALOU Hicham Thème
Soutenu publiquement, le / 09 / 2020 , devant le jury composé de :
M Maliki Fouad MCB ESSA. Tlemcen Président
M Mohammed BENNEKROUF MCB ESSA. Tlemcen Directeur de mémoire M Mohammed Adel HAMZAOUI Docteur Univ. Tlemcen Co- Directeur de mémoire M Brahami Mustapha Anwar MAA ESSA. Tlemcen Examinateur 1
Melle Kouloughli Sihem MCA Univ. Tlemcen Examinateur 2
la Logistique Digitale pour
l’Amélioration de Système de Stockage pour le E-commerce
يـملعلا ثـحبلاو يـلاعلا مـيلعتلا ةرازو ةــيقيبطتلا مولعلا يف اـيلعلا ةـسردـملا
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ناسملت -
MINISTRY OF HIGHER EDUCATION AND SCIENTIFIC RESEARCH HIGHER SCHOOL IN APPLIED SCIENCES
--T L E M C E N--
For obtaining Master’s degree
Thesis
Faculty: Industrial Engineering
Specialty: Industrial Management and Logistics Presented by:
KHELIL CHERFI Manal ALLALOU Hicham
Theme
Supported Publicly on, / 09 / 2020 , in front of the committee composed of :
Mr. Maliki Fouad MCB ESSA. Tlemcen Président
Mr. Mohammed BENNEKROUF MCB ESSA. Tlemcen Directeur de mémoire Mr. Mohammed Adel HAMZAOUI Docteur Univ. Tlemcen Co- Directeur de mémoire Mr. Brahami Mustapha Anwar MAA ESSA. Tlemcen Examinateur 1
Mrs. Kouloughli Sihem MCA Univ. Tlemcen Examinateur 2
University Year: 2019 /2020
Digital Logistics for Storage System Improvement for E-commerce
يـملعلا ثـحبلاو يـلاعلا مـيلعتلا ةرازو ةــيقيبطتلا مولعلا يف اـيلعلا ةـسردـملا
-
ناسملت -
MINISTRY OF HIGHER EDUCATION AND SCIENTIFIC RESEARCH HIGHER SCHOOL IN APPLIED SCIENCES
--T L E M C E N--
Dedication
This work is dedicated To my family
To my mother who believes in me To my father who encourages me To my friends who care about me
And to my teachers who left an impact on me Most of all to allah who blessed me with these people
and the endless gifts he gave me.
Manal KHELIL CHERFI
Dedication
I dedicate this work, the fruit of my years of study
to my parents, their patience, their unconditional love, they were the ones to help me become the man I am
my gratitude for all my friends and teachers in Tlemcen, they were my second family, they helped me a lot grow and have new vision of the
world.
a special thanks to EasyRelay team for all their contribution in our work.
Hicham Allalou
Before anything, we would love to thank Allah, for giving us strength, courage and ability to accomplish the present work.
We are using this opportunity to express our deepest gratitude to our supervisors Mr.
Mohamed BENNEKROUF and Mr. Adel HAMZAOUI they guided us and kept us on the correct path. this thesis couldn’t be completed without there guidance. even through the
hard circumstances that the world is going on they keep track on us, thank you for all We also address our great thanks to Mr. Fouad MALIKI who have always been there when we needed him, who gave all what he could and from the deepest of his heart for us and for
Industrial Engineering department.
Special thanks to our teachers of Tlemcen, who worked with passion for our education, whom we have always heard of before joining ESSAT, of their competency, qualification and most of all helpfulness, thanks to them for giving us an experience behind our expectations.
We are deeply grateful to all members of the jury: Mrs, Kouloughli Sihem, Mr. Brahami Mustapha Anwar for agreeing to read the thesis and to participate in the defense of this
thesis.
At the end, we address our sincerest thanks to our families, for their patience of us being away from them, for their trust which gave us confidence, and for their endless love that gave
us everything
Thank you all….
Dedication ... I Dedication ... II Acknowledgment ... III ABSTRACT AND KEY WORDS: ... VII ABBREVIATIONS: ... VIII LIST OF FIGURES: ... X LIST OF TABLES: ... XII General Introduction: ... XIII
Chapter one: General Overview ... 1
I.1. Introduction : ... 1
I.2. Section One : E-commerce, E-logistics and 3PL firms: ... 1
I.2.1. Ecommerce: ... 1
I.2.2. E-logistics: ... 1
I.2.2.1.1. Between Traditional Logistics and E-logistics: ... 1
I.2.2.2. The historical Development of E-logistics: ... 2
I.2.2.3. The Criteria to Take into Consideration to Define E-logistics Strategy: ... 2
I.2.3. Logistics in E-commerce: ... 3
I.2.4. Inventory management ... 3
I.2.5. E-commerce and Logistics Outsourcing to 3PL: ... 4
I.2.5.1. 3PL’s Processes Through Services : ... 4
I.2.5.2. Advantages: ... 6
I.2.5.3. Disadvantages : ... 7
I.3. Section Two : E-commerce fulfillment ... 8
I.3.1. E-fulfillment: ... 8
I.3.1.1. E-commerce’ Store and Fulfillment Center Integration: ... 8
I.3.1.2. Receiving and inventory management : ... 9
I.3.1.3. Order’s fulfillment Pick, pack and Ship: ... 9
I.3.1.4. Returns processing (Reverse Logistics) : ... 10
I.3.2. E-fulfillment Center: ... 10
I.3.3. Between Warehouse and Fulfillment Center: ... 11
I.4. Section Three: Digital Supply Chain Management ... 12
I.4.1. Traditional SC model and digital SC model: ... 12
I.4.1.1. Traditional Supply chain : ... 12
I.4.1.2. Digitalized Supply chain : ... 13
I.4.1.3. Smart supply chain enablers — success factors: ... 15
I.5. Section Four : Digital Supply Chain in Industry 4.0 ... 16
I.5.1. Industry 4.0: ... 16
I.5.1.1. Digital Ecosystem : ... 17
I.5.1.2. Industry 4.0 Objectives : ... 17
I.5.2. Characteristics of Industry 4.0:... 18
I.5.2.1. Cyber-Physical System (CPS) : ... 18
I.5.2.2. Internet of Things (IoT) : ... 18
I.5.2.3. Internet of Services (IoS): ... 18
I.5.2.4. Big Data Analytics: ... 18
I.5.3.1. Simulation : ... 20
I.6. Conclusion : ... 20
Chapter two: E-commerce Fulfillment Center Facilities ... 22
II.1. Introduction ... 23
II.2. Section One: Introduction to the Project ... 23
II.2.1. Introduction to the Project: ... 23
II.2.1.1. Outsourcing to Third-Party Logistics Firm’s Motivation : ... 24
II.2.1.2. Mission : ... 24
II.2.1.3. Vision : ... 24
II.3. Section Two: Fulfillment Warehouse Realization Plan ... 24
II.3.1. Facility Location: ... 25
II.3.1.1. General Analysis: ... 25
II.3.1.2. Qualitative Analysis Method:... 27
II.3.1.3. Quantitative Analysis: ... 29
II.3.1.4. Services: ... 33
II.3.2. Orders Fulfillment Process Planning: ... 33
II.3.2.1. Inventory Management : ... 33
II.3.2.2. Pick and pack (PnP) : ... 36
II.3.3. Fulfillment Warehouse Layout: ... 38
II.3.3.1. Flow Process Chart: ... 38
II.3.3.2. Warehouse Layout: ... 38
II.4. Section Three: Storage... 41
II.4.1. Storage System: ... 41
II.4.1.1. Storage System : ... 41
II.4.1.2. Storage mean (tool): ... 41
II.4.2. Storage Technique: ... 41
II.4.2.1. Storage organization: ... 42
II.4.2.2. Organization Inside the Bin : ... 42
II.5. Conclusion : ... 43
Chapter tree: Smart shelves Solution ... 44
III.1. Introduction ... 45
III.2. Section One : Internet of Things ... 45
III.2.1. IoT Architecture: ... 45
III.2.2. Impact of IoT Application: ... 47
III.2.3. IoT Solution Integration “Smart Shelving”: ... 47
III.3. Section Two : RFID Solution : ... 48
III.3.1. RFID technology:... 48
III.3.2. Solution: ... 48
III.4. Section Three: Sensors Solution ... 49
III.4.1. Solution: ... 50
III.4.1.1. Advantages: ... 51
III.4.1.2. Disadvantage: ... 51
III.4.1.3. Sensors Implementation: ... 51
III.4.2. Conclusion : ... 52
Chapter four: Web Application Solution ... 53
IV.2.1. UML: ... 55
IV.2.1.1. Use Case Diagram Overview : ... 56
IV.2.1.2. Purpose of Use Case Diagram: ... 56
IV.2.1.3. Use Case Diagram’s Elements: ... 56
IV.2.1.4. The Actors of our Study and Their Roles: ... 58
IV.2.2. User Case Diagram Representation: ... 59
IV.2.2.1. Use case diagram ‘Users Management’: ... 59
IV.2.2.2. Use case diagram ‘Articles Management’: ... 59
IV.2.2.3. Use case diagram ‘Billings Management’: ... 60
IV.2.2.4. Use case diagram ‘Sellers Payment’: ... 61
IV.2.2.5. Use case diagram ‘Pickup management’: ... 61
IV.2.2.6. Use case diagram ‘Storage Management’: ... 62
IV.2.3. Class Diagram Representation:... 62
IV.3. Section Two : Application Realization ... 64
IV.3.1. Programming Languages Used: ... 64
IV.3.1.1. PHP :... 64
IV.3.1.2. HTML : ... 64
IV.3.1.3. JavaScript : ... 64
IV.3.1.4. Ajax: ... 65
IV.3.1.5. MySQL : ... 65
IV.3.1.6. Design Tools : ... 65
IV.3.1.6.1. CSS ... 65
IV.3.2. Technologies Used:... 66
IV.3.2.5. PhpStorm : ... 66
PhpStorm ... 66
IV.3.2.6. Xampp : ... 66
IV.3.3. Fulfillment Center Management System : ... 66
IV.3.3.5. Authentication page : ... 66
IV.3.3.6. Main page : ... 67
IV.3.3.7. Employees page: ... 68
IV.3.3.8. Payments Page :... 69
IV.3.3.9. Articles page : ... 70
IV.3.3.10. Ordres page : ... 71
IV.3.3.11. Products page: ... 73
IV.3.3.12. Pickups page : ... 75
IV.4. Conclusion : ... 76
GENERAL CONCLUSION: ... 77
Reference: ... 78
Abstract:
The objective of this work is to improve storage system of fulfillment centers while applying digital logistics technologies in order to ensure storage management, efficiency, and transparency, all by establishing and facilitating e-commerce fulfillment center, and then implementing in it « internet of things » for smart shelving system and finally designing a web application in order to manage stock, inventory, and other operations within the fulfillment center.
Keywords: digitalization, logistics, storage, system, IoT, web-application, improvement, fulfillment-center.
صخلم : زكارمل نيزختلا ماظن نيسحت وه لمعلا اذه نم فدهلا تايبلطلا زيهجت
ب ةيمقرلا ةيتسجوللا تاينقتلا قيبطت كلذو
لجأ نم
ةرادإ نامض ةيفافشو ،ةيلاعف ،
زختلا ني
، لك اذه زكرم ءاشنإ للاخ نم تايبلط زيهجت
تنرتنإ" ذيفنت مث ،ةينورتكللإا ةراجتلا
زكرم لخاد ىرخلأا تايلمعلاو نوزخملا ةرادلإ بيو قيبطت ميمصت ا ًريخأو يكذلا فوفرلا ماظن يف "ءايشلأا تايبلطلا زيهجت
.
زكرم ،نيسحتلا ،بيولا قيبطت ،ءايشلأا تنرتنإ ،ماظنلا ،نيزختلا ،تايتسجوللا ،ةنمقرلا :ةيسيئرلا تاملكلا زيهجت
تايبلطلا
Résumé :
L'objectif de ce travail est d'améliorer le système de stockage des centres de distribution tout en appliquant les technologies de la logistique numérique, afin d'assurer la gestion, l’efficacité et la transparence du stockage, le tout, en établissant et facilitant le centre de distribution de commerce électronique, puis en y mettant en œuvre « l’internet des objets » pour un système de rayonnage intelligent. Et enfin, la conception d'une application Web afin de gérer les stocks, l’inventaire et d'autres opérations au sein du centre de distribution.
Mots clés: digitalisation, logistique, stockage, système, IoT, application web, amélioration, centre de distribution.
DSC: Digital Supply Chain 3PL: Third-Party Logistics
ICT: Internet Communication Technology B2B: Business to Business
B2C: Business to Customer
WMS: Warehouse Management System TMS: Transportation Management System EDI: Electronic Data Interchange
SAV: Stock at valuation SC: Supply Chain
SCM: Supply Chain Management
SCMCs: Supply Chain Management Components SCMPs: Supply Chain Management Processes
SCMNS: Supply Chain Management Network Structure SCFs: Supply chain Flows
IoS: Internet of Services IoT: Internet of Things CPS: Cyber Physical System AI: Artificial Intelligence AR: Augmented Reality SKU: Stock Keeping Unit UPC: Universal Product Code FIFO: First in First Out
PnP: Pick and Pack
WSN: wireless sensors network GPS: global position system EDI: electronic data interface WSN: wireless sensor network
GSM: global system for mobile communications
M2M: market to market QoS: Quality of Service
SOA: service-oriented architecture
Figure I.4-1 Essential Constructs of Supply Chain Management (source: Digital Business
Strategies) ... 13
Figure I.4-2 The digitally enabled supply ecosystem vs. traditional linear supply chain (source: Pwc) ... 15
Figure II.3-1The average of orders in a national 3PL firm for November’19 to April’20 by wilaya code ... 26
Figure II.3-2 Map of Algerian Provinces with the Highest rate of Orders ... 28
Figure II.3-3 Algerian Highways Network’s Situation (Source: Wikipedia) ... 29
Figure II.3-4 SKU and UPC on Product (source: google) ... 34
Figure II.3-5 : Inventory Management Process ... 35
Figure II.3.3-1 Flow Process chart example of our Fulfillment Centre ... 39
Figure II.3.3-2 Types of layouts (source : Facility Design) ... 40
Figure II.3.3-3 Fulfillment center layout and material flow ... 40
Figure II.4-1 Illustration of shelves, Plastic bin and Aisle ... 42
Figure III.2-1 The System Architecture of IoT (source: RFID and its application on IoT) ... 46
Figure III.3-1 The components of RFID System (source: RFID and its application on IoT) .. 48
Figure III.3-2 Smart shelves with RFID system integrated ... 49
Figure III.4-1 Sensors’ Integration on storage bins ... 50
Figure III.4-2 Capacitive Proximity Sensor (source: Automation Insights) ... 51
Figure III.4-3 Proximity Sensing Range Based on Sensor Area Size ... 52
Figure IV.2-1 Web Application Principle ... 54
Figure IV.2-2 UML Diagram types (source: visual-paradigm) ... 55
Figure IV.2-3 Entreprise Architect Logo ... 59
Figure IV.2-4 User Management Use Case Diagram ... 59
Figure IV.2-5 Article Management Use Case Diagram ... 60
Figure IV.2-6 Billing Management Use Case Diagram ... 60
Figure IV.2-7 Sellers Management Use Case Diagram ... 61
Figure IV.2-8 Pickup Management Use Case Diagram ... 61
Figure IV.2-9 Storage Management Use Case Diagram ... 62
Figure IV.2-10 Class Diagram Representation ... 63
This is the first page that users’ access to, it allows them to authenticate and access the app by indicating and username and typing the password. Figure IV.3-1 ... 66
Figure IV.3-2 Authentication page ... 66
After the authentication, the user will be guided to the home page. The main page is used to show the statistics depending on the authenticated user and some relevant information, Figure IV.3-3. ... 67
Figure IV.3-4 main page - admin ... 67
• the seller will view only the relevant information to his operations, Figure IV.3-5 ... 67
Figure IV.3-6 main page - seller ... 68
Figure IV.3-7 Employees Page ... 68
Figure IV.3-8 Add Employee window ... 69
Figure IV.3-9 Payments Page ... 69
Figure IV.3-10 Payment Details window ... 70
Figure IV.3-11 Add new Payment window ... 70
Figure IV.3-12 Articles Page ... 71
Figure IV.3-13 Add Articles window ... 71
Figure IV.3-14 Orders Page ... 72
Figure IV.3-18 Pickups Page ... 76
Table 1 The difference between a warehouse and a fulfillment center ... 11 Table 2 Traditional vs digitalized supply chain main attributes (source: Digital supply chain model in industry 4.0) ... 14 Table 3 The long road to industry 4.0, the digitalization of every aspect of business (source:
PwC) ... 17
Nowadays, E-commerce is developing in a remarkable rate, there are around 12-24 million ecommerce websites across the entire globe (wpforms), and it is expected by 2040 that 95% of all purchases will be done online (Nasdaq), the competition is tough.
When choosing the website from where to purchase, customers think besides the price of delivery: how long does it take to receive my purchase, is return possible, what if the product arrives damaged…
However, here comes the challenge of e-commerce business owners, which is ensure a good logistics in order to respond to customer’s expectations and experience. The option of outsourcing logistics to third-party logistics firms is one of the best decisions to take for orders’
fulfillment, returns management, shipment, and inventory management.
One of the most difficult decisions facing e-commerce business owners, is choosing the right third-party logistics firm, as it contributes strongly to their success or failure. On the other side, one of the many challenges facing third-party logistics providers, is ensuring an efficient logistics planning of storage, and shipping while keeping up with the technological development for better logistics’ performance.
For this matter the question is: Except fast shipment, how can third-party logistics firm ensure effective orders’ fulfillment operations, how does it manage its storage and what technologies can it adopt to digitalize its logistics?
In order to answer these questions, the present work consists of in one hand, a general study of a sustainable strategic plan that Third-party logistics firms make, which is e-fulfillment centers’ facilities. It is a full complete study of: fulfillment center’s location decision based on qualitative and quantitative analysis, orders’ fulfillment process planning of inventory management, picking and packing, fulfillment center layout and finally storage system, techniques, tools and organization. In the other hand, logistics digitalization with smart shelving system and web application.
The first chapter, will be a bibliographical study of key elements and definitions of our study, such as e-commerce, e-logistics, third-party logistics firms, e-fulfillment, then digital supply chain management and industry 4.0.
The second chapter will be an introduction to the project of building e-fulfillment centers, and realization plan of all its aspects of location, process, and storage planning.
The third chapter will be implementing internet of things for smart shelves, using some technologies for better efficiency and transparency.
The fourth chapter, will be about designing a web application for fulfilment center’s management, and inventory traceability.
Chapter one:
General
Overview
I.1. Introduction :
This chapter is a bibliographical study that aims to provide the reader a general overview of the topic, in order to get him/her understand the constructive notions of the theme. The chapter is divided into four sections. We will be discussing firstly E-commerce, e-logistics and logistics outsourcing, to move later to E-commerce fulfillment, of receiving inventory, managing orders, picking packing and shipping to finally returns processing. Thirdly, we will tackle digital supply chain management, its development, its comparison with the traditional supply chain and its success factors. At the end, we will highlight the DSC in Industry 4.0, the digital ecosystem, industry 4.0 objectives and characteristics.
I.2. Section One : E-commerce, E-logistics and 3PL firms:
This first section is about developing the three main notions: E-commerce, E-logistics and Outsourcing logistics. We will begin with talking about e-commerce and e-logistics, we will be moving then to logistics and inventory management in e-commerce, to finally develop 3PL’s topic of outsourcing: processes, advantages and disadvantages.
I.2.1. Ecommerce:
E-commerce is the combination of traditional business practices with the computer and information technology (ICT) that can create entirely new services, distinct from conventional services. It refers to an economic system in which businesses and consumers use computers and networked technologies, which generate a completely new market.
The term e-commerce (also called Electronic Commerce), often confused with the term e-Business, actually designates only one facet of e-Business covering the use of an electronic medium for the commercial relationship of a company with its customers and / or suppliers. E-Commerce is associated with e-Logistics.
I.2.2. E-logistics:
The terms electronic logistics, e-logistics, internet-enabled logistics or e-business (e- commerce) logistics have been loosely used in both academia and practice. Some consider e-logistics as a supportive delivery process for fulfilling online e-commerce orders (Joseph, Laura and Srinivas, 2004)[1].
Others believe that e-logistics implies the use of information and communication technology (ICT) to support the provision and execution of a broad range of logistics activities (Daly and Cui, 2003; Gunasekaran, Ngai and Cheng, 2007)[2]. While the former narrowly defines the e-logistics utility in an online business to customer (B2C) or business to business (B2B) setting, the latter offers a broader concept focusing on utilizing ICT to manage information and information flows in supply chains or supply networks[3].
I.2.2.1.1. Between Traditional Logistics and E-logistics:
E-logistics is considered to be e-commerce weakness in the late 1990s, because it was neglected by most start-ups. It has become later a real key success factor to master in order to be successful. However, delivery delays, errors and damages in
orders can provoke a devastating effect on the brands’ image of e-commerce players, it can make them lose forever their potential clients.
E-commerce logistics, like any traditional business, answers questions of transportation, storage and information systems. It therefore does not, strictly speaking, have any specific features. However, the supply chain is "simplified", the disappearance of intermediaries has direct effects on:
• Transportation: “last mile” which means the movement of packages from the fulfillment center to their final destination, it is one of the most difficult challenges in SCM of minimizing cost, ensuring transparency, increasing efficiency, and improving infrastructure;
• Information (much more automated): with current ICT standards of exchanging data via internet or dedicated electronic networks with the help of wired and wireless technologies, the aim of this all is to reduce data errors and improve efficiency in decision-making and more;
• Storage: more consequent;
• value added services: such as co-packing or co-manufacturing[4].
I.2.2.2. The historical Development of E-logistics:
There is an observable trend in e-logistics developments over the past five decades, from unconnected applications to connected systems and networks, emphasizing ‘single source of truth’ (a data storage principle to always source a particular piece of information from one place), modular design and on-demand use.
Merali, Papadopoulos and Nadkarni (2012) summarized the following four-step changes in ICTs since the 1960s, which have also had a major influence on the development of e-logistics[5]:
• connectivity (between people, applications and devices);
• capacity for distributed storage and processing of data;
• reach and range of information transmission;
• rate (speed and volume) of information transmission[5].
I.2.2.3. The Criteria to Take into Consideration to Define E-logistics Strategy:
• Level of service (flawless);
• Stock level;
• Traceability of products from the supplier to the end customer (WMS warehouse management system, TMS transportation management system, EDI electronic data inter-charge);
• Delays between placing the order and receiving the order by the end customer;
• Number of intermediaries between the supplier and the end customer;
• Number of delivery options offered on the site;
• Stock at Valuation (SAV) quality[4].
I.2.3. Logistics in E-commerce:
We can distinguish many challenges facing e-logistics:
• Processing a large number of small low value unit packages;
• Monitoring of information on packages, from preparation to delivery;
• Increasingly demanding delivery times (deadlines)[4].
E-commerce is similar to the classic model of large distribution (dominant model):
• Centralized model: For most e-merchants, management of purchases, stocks and order preparation can be done in one place (at least nationally);
• Decentralized model: Some e-merchants (mainly those with very large and diversified volumes) use several warehouses, dedicated to specific types of products, to perform these same tasks[4].
Unlike mass distribution, there will be greater geographic proximity of the warehouse to the customer. There is no interest in terms of cost (transport service often billed at the same price regardless of the distance), but increasing the number of platforms to be closer to consumers can reduce delivery time[4].
I.2.4. Inventory management
One of the key concepts of e-logistics is the optimization of supplies and stocks:
• Challenges: Create a balance between sales and logistics;
• Balanced: The sales representative wants to offer a wide and varied choice of products; the logistics must not be penalized by a significant increase in the number of references;
• Central question: Today, to stay in the race, e-merchants must constantly invest in ever larger areas. (In 6 years, Pixmania has changed warehouse 3 times). La Redoute and Les 3 Suisses have built their success on their ability to manage large warehouses that store tens of millions of packages each year. Masters in the preparation of single orders[4].
• Powerful Tools for Processing Large Volumes and References:
Pick to Belt: Products taken directly placed on a drainage conveyor for a sorting system;
Pick to Light: Automatic devices that manage displays placed on the front face of each storage cell. An indicator light indicates where to collect, a digital display indicates
the number of items to collect, a push button allows to validate the collections.
improves productivity by 20 to 30%;
Pick to Voice: Based on voice recognition, allows the preparer to "communicate" with the warehouse management system via a headset / microphone. Free the hands of the preparer, reduce picking time by 30% and reduce preparation errors[4].
I.2.5. E-commerce and Logistics Outsourcing to 3PL:
There are three different attitudes:
• Keep your logistics in-house: That is to say take care of it even when sales are reasonable, then hire staff to deal with the development of the activity;
• Keep its logistics internally temporarily: in order to better understand the logistics issues as well as the real logistics needs. This phase is generally a prerequisite for outsourcing, when the number of orders becomes too large;
• Directly outsource its logistics: and set up a partnership with an e-commerce logistics provider (3PL company)
.
E-merchants whose volumes are small, are those who outsource most often.
One way to streamline ecommerce supply chain, warehousing and distribution included, is by outsourcing logistics to a third-party logistics (3PL) provider[6].
Third-party logistics was propelled first in US; later on, European nations put it on to successfully deal with an organization’s coordination exercises, re-appropriating the capacity and purchasing the administrations[7].
Outsourcing order fulfillment processes to a third-party logistics (3PL) company means they handle the following services on your behalf using their infrastructure, workforce, and technology. So, what exactly happens at a 3PL warehouse once a customer clicks “Submit order” on your online store? [8]
I.2.5.1. 3PL’s Processes Through Services :
• Receiving: a 3PL cannot ship orders without inventory on hand. The “receiving”
of inventory in a 3PL warehouse refers to the acceptance of incoming inventory followed by its storage. Each 3PL has its own processes and capacity for receiving and storing inventory;
• Warehousing: Once inventory is received, we store items in our fulfillment centers. Each item has a separate dedicated storage location, either on a shelf, in a bin, or on a pallet. Different 3PLs have different storage capacities; not all 3PL warehouse space is created equal. It is important to work with a 3PL that has more than enough storage space for your current inventory — as your
you. Depending on your products, you may also need temperature-controlled storage or refrigeration. Different 3PLs have different levels of accommodations available to meet these needs;
• Picking: When a customer places an order, it is time for the 3PL fulfillment process to begin. Some 3PLs require you to manually upload orders to their system. Sometimes, this involves spreadsheets including order details, customers’ shipping details, and more. This can be an inefficient and complex way to manage orders. Other 3PLs have sophisticated technology that integrates directly with your ecommerce platform or marketplace. These 3PL fulfillment software integrations bring orders, shipments, inventory tracking and stock levels, and more, together in one place to streamline the fulfillment process for more automated shipping. This includes automatically pushing customers’ online orders to your 3PL as soon as they are placed. When an order is sent to your 3PL, it is assigned to the picking team. The picking team receives a picking list of the items, quantities, and storage locations at the facility to collect the ordered products from their respective locations;
• Packing: When all items in an order have been picked, it’s time to get them securely packed for shipping. The packing materials used will depend on your 3PL’s capabilities, your brand preferences, and the items being shipped. The most common standard packing materials include: Unbranded boxes, Bubble mailers, Poly bags, Packing tape, Bubble wrap, Paper-based dunnage. Some 3PLs will charge for packing materials as a separate line item, while others include them as part of their fulfillment services. The 3PL will choose the best packing materials to both protect your products and achieve the lowest practical dimensional weight. They will also optimize packages so that you don’t have to split shipments;
Dimensional weight is a shipping pricing technique that takes into account package dimensions to determine shipping rates. Using the right packing materials can help keep logistics costs low. If you want your brand to shine through your shipping, make sure you partner with a 3PL that allows you to use custom packaging, such as custom boxes and inserts. Oftentimes, receiving a package is the first in-person experience a customer has with your brand, so branded packaging can make a big impression
• Shipping: The next step is shipping your order. Most 3PLs will purchase and print shipping labels on your behalf. Some 3PLs have preferred carrier partners, while others compare shipping costs from a variety of carriers. The latter helps 3PLs offer clients the most affordable pricing possible for the delivery speed that each customer chooses. Carriers such as DHL, USPS, and UPS pick up orders from 3PL warehouses to ship. The carrier and shipping speed for each order depend on the 3PL’s partnerships and policies as well as the ship options offered by the client and selected by the end customer. Once the order ships, 3PLs with the integrated technology will automatically push tracking details to merchants’
online stores;
• Returns processing: 3PLs help in facilitating the returns process and getting your unused merchandise back into your available inventory[9].
I.2.5.2. Advantages:
• Focus on core business processes: The responsibility of a fulfillment center is to deliver goods to your customers. By outsourcing this mundane work, your company will likely have more time on hand to focus on core business processes.
Not only this, fulfillment centers “fulfills” a lot of obligations that otherwise your business needed to address;
• Free up your inventory space: If not for a long time, fulfillment centers still offer a pretty decent short time inventory storage option for your main warehouse.
This is especially helpful in those sales seasons where you need to meet up with the customer’s expectations, and usually, suppliers are all packed. So, instead of relying on the scheduled arrival of your reordered demanding product, you can have some extra free up shelves to store your most demanding products;
• Located close to customers for short shipping times: Staying on top of the business food chain is not an easy task. Especially when your consumers nowadays are starting to believe that same day delivery is important;
Warehouses are located on the outskirts of the city. As such, whenever you receive an order and wish to fulfill it, the transit time, of course, is going to take a long time.
Fulfillment centers are located close to the cities and usually have multiple stores operating at the same time. This is a faster, efficient and effective way for order processing.
• May offer a customer service division: Retail business is not only all about sales. But marketing your brand and focusing on customer relationships also.
The famous principles of inbound marketing (attract – engage – delight) works like a charm in this industry. But oftentimes, we need to focus on the business processes so much that we forget about these things. Many fulfillment centers can serve as your customer service center on the frontlines to ease this burden from your shoulders;
• Lowers your shipping costs: Outsourcing delivery of goods to your customers not only gives you peace of mind and frees up your human resources but also lowers your shipping costs. This is because fulfillment centers do not serve only one client at a time but rather a bunch of clients. Therefore, the shipping cost is lowered;
• Hassle free picking and packing: Fulfillment centers not only help in delivering your product to your customers but also take care of all your shipping problems. That includes picking up the inventory from your warehouse and
• Shipping labels and offer custom packaging: When picking and packing are done, shipping labels come into play. For those of you who do not know, shipping labels consist of all the crucial key details regarding the package i.e., receiver’s name and address, email, tracking number, package weight…etc.
Now you might wonder, do you need to take care of shipping labels?
Absolutely not!
Fulfillment centers are the one stop solution for all your shipping needs.
They address your shipping labels duty too. Also, sometimes a customer might request for custom packaging for special occasions. Such requests are also entertained for delightful customer experience.
• Will deal with reverse logistics: Retail sales are not always as easy as it seems.
Sometimes retailers have to deal with product returns due to transit damage, faulty product, delivery of the wrong item, or simply because the order failed to deliver on time. Consumers nowadays are growing impatient and returns in the retail industry are becoming a bigger issue to address;
• Lowers your overhead costs: Handling your order fulfillment by yourself will cost you with fixed overhead costs. Warehouse rent, equipment, indirect labor, etc. are the names of the few. As your order volume increases, the cost per order might also go up along with these fixed costs. Outsourcing your order fulfillment to the fulfillment center is a way to escape from those overhead costs[10].
I.2.5.3. Disadvantages :
• Loss of control: If you have started your business from ground zero, it may be difficult for you to digest the fact that an entire branch of your business will now be handled by a third-party logistics company. Some ecommerce business owners find it difficult to give control of their fulfillment operations.
Ultimately, it requires that you trust your fulfillment partner, that you’ve done your due diligence to ensure it’s a reputable, financially-stable company, and knowing that all of your demands may not be met;
• Lack of customization: It is not uncommon for business owners to want to add some time of customization into their fulfillment process. Say, for example using branded boxes, adding a personalized letter or using custom packing materials. However, when you outsource the fulfillment process to your logistics partner, you have to sacrifice some of the customization[10].
After that we got familiar with ecommerce, its logistics and outsourcing logistics, now it is time to dig deeper, and discover how orders are processed. The next section will be explaining e-fulfillment or as it is also called e-commerce fulfillment.
I.3. Section Two : E-commerce fulfillment
Successful E-commerce businesses all have one thing in common: terrific e-commerce fulfillment. As consumers, when we want something, we want it now. As sellers, fulfilling those demands is easier said than done. While order’s fulfillment may not be the most glamorous aspect of running an ecommerce business, it is a function that directly impacts an online merchant’s bottom line, knowing that 61% of shoppers will abandon their cart if shipping, taxes, and other fees are too high, 53% of shoppers say that speed of delivery is an important factor when it comes to evaluating their online orders, 38% of shoppers will never shop with a retailer again if they had a poor delivery experience, 25% of shoppers have canceled an order because of slow delivery speed[11].
In this section, we will be talking about e-fulfillment basics and returns processing, and then we will be highlighting e-fulfillment center what is it, and how it is different from a warehouse.
I.3.1. E-fulfillment:
Also called e-commerce order’s fulfillment, is the process of storing inventory, picking and packing products, and shipping online orders to customers.
E-fulfillment is a specialized part of a larger order fulfillment industry, in that it works only with online webstore merchants. There are four basic components of the e-fulfillment process[12]:
I.3.1.1. E-commerce’ Store and Fulfillment Center Integration:
When you think of a fulfillment warehouse, you might imagine rows of shelves filled with products. At its core, however, every good order’s fulfillment center is a technology company[13].
Your Ecommerce store should integrate seamlessly with your fulfillment center.
Your orders should flow directly to the people who will pack and ship them. Here are three important features to take into consideration while choosing a good Ecommerce fulfillment center:
• Your 3PL company should integrate with every platform on which you sell. Your fulfillment center should create a custom app to connect incoming orders for any sales channels it does not support;
• The IT staff is just as important as the people who pack and ship your orders.
Make sure your fulfillment provider has a robust IT department;
• Look for a fulfillment center with minimal downtime. In addition, look for responsive support to help smooth any glitches quickly[13].
I.3.1.2. Receiving and inventory management :
Pallets of your merchandise ship to your fulfillment warehouse. Then, those pallets get logged into inventory and placed on shelves, ready to fill your orders[13].
Receiving is the spot where many fulfillment warehouses fall short. When pallets sit on a loading dock, your products aren’t in inventory. Of course, no inventory means no sales. This, as you may have guessed, is bad[13].
Another inventory management challenge is shrinkage. Shrinkage is a nice way of saying “loss, theft, and breakage.” Most e-fulfillment centers have an allowance for shrinkage in their contracts. This means that you will eat the cost of the lost merchandise, up to a certain amount. In general, shrinkage allowances range from 2 to 10 percent of your warehoused inventory[13].
Look for these three qualities in your order fulfillment provider:
• Your e-commerce fulfillment center should place your stock into inventory within one to two days of receiving it;
• You should be able to log into your inventory management system. This real- time data is critical for maintaining Goldilocks stock levels. That is, not too much (which ties up all your capital in inventory). And not too little (which puts you at risk of running out before you can restock — a good way to lose sales);
• Your 3PL provider should have a low shrinkage allowance. Some fulfillment centers make inventory management a top priority. These providers are responsible for items lost or broken while on the shelves. In this case, you do not have to account for shrinkage when you calculate ideal stock levels[13].
I.3.1.3. Order’s fulfillment Pick, pack and Ship:
When an order comes in, your fulfillment warehouse will pick the right items to put in the box. A floor worker will pack them in the perfect box. Your 3PL provider will ship them to your customer. This is the pick, pack, and ship process[13].
With centrally-located fulfillment warehouses, shipping to your customers is speedy. It’s important that the 3PL provider turn your orders around quickly, too.
Otherwise, you will lose the benefit of that shorter shipping time[13].
Accuracy is vital. Mistakes in picking and packing orders can cost you customers.
Here are three ways your e-commerce fulfillment center can help you meet customer expectations for fast and low-cost shipping:
• Look for a 3PL provider that offers next-day turnaround, or even same-day shipping;
• Choose a fulfillment warehouse, or warehouses, that are centrally-located. The fulfillment center should ship to most of your customers within two days or less;
• Ask for data on the fulfillment center error rates[13].
I.3.1.4. Returns processing (Reverse Logistics) :
You cannot avoid e-commerce returns. Ease of returns is important to e- commerce shoppers. This can be a major factor to drive your sales. Logging in returns is an important function of e-commerce fulfillment. The more quickly your fulfillment provider processes returns, the more quickly your customer will get a refund. Efficient returns also get your stock back on the shelf so it is available to sell again[13].
Here are three ways your e-commerce fulfillment partner can make returns a breeze for you and your customers:
• Find a warehouse that will put returns back on the shelf within one to two days.
Returns that sit on receiving docks are a drag on your business and consumer confidence;
• Let your 3PL provider handle customer service for returns, so you can focus on increasing your sales;
• Create a process for handling damaged goods. Consider setting up a secondary site to sell returned merchandise at a discount. Make sure your e-commerce fulfillment provider can help evaluate returns and process orders for discount goods[13].
I.3.2. E-fulfillment Center:
The e-fulfillment center receives each client’s merchandise and provides any extra receiving services needed such as kitting, labeling or sorting[14]. For each individual items or unopened cases of items if sold as cases are then stored in unique bar code labeled picking locations.
The e-fulfillment center provides special software that allows for automated importing of fulfillment orders from each client’s shopping cart system plus then returns the resulting fulfillment tracking and updated inventory data back to each client’s shopping cart[14].
Each order is quickly picked, packed and shipped and most of e-fulfillment centers offer rate shopping and discounted delivery options like FedEx SmartPost. Some, but not all centers offer a wide range of shipping carton sizes which is now an important feature because of new UPS, FedEx and postal DIM rules[14].
Something new in the e-fulfillment business is Amazon prep and Walmart prep services including third party shipping, special labeling and special packaging to meet Amazon and Walmart specifications[14].
This allows an e-fulfillment client to ship their own orders directly to their customers as well as support their Amazon and Walmart seller programs while avoiding expensive Amazon and Walmart warehousing and handling charges[14].
I.3.3. Between Warehouse and Fulfillment Center:
The most significant difference between fulfillment centers and warehouses is the extent of their operations and the type of customers they serve (Table 1-1) [10].
The difference between a warehouse and a fulfillment center:
Table 1 The difference between a warehouse and a fulfillment center
Fulfillment centers warehouse
Customers Fulfillment centers are
designed to serve customers directly. Better known to work with e-commerce business and B2C
Warehouse operations generally serve B2B customers
Operations Fulfillment centers intend to store inventory for a minimal amount of time or till the time they can ship orders directly to the customers.
Warehouse is the storage house of giant stocks of items. Thus, the majority of logistics operations that take place at warehouse concern a freight carrier or an intermodal provider
Goals The goal of fulfillment
centers is to keep a minimal amount of in hand inventory, processing ecommerce orders, and try to get rid of it as soon as possible.
Fulfillment centers are not designed for prolonged storage of inventory.
The goal of the warehouse is a safe long-time storage solution of your inventory, typically several months to a year.
From the differences spotted above, it is evident to say that every fulfillment center can be called a warehouse, but a warehouse can never be called a fulfillment center.
This is simply because warehouses do not handle order processing while, on the other hand, a fulfillment center, even though they can store inventory for a short period of time, handles order processing and customer service at the same time.
Now that we know what is order’s fulfillment, how does it happen, now it is high time to discover what makes this e-fulfillment efficient, always updated and synchronized with its different processes.
I.4. Section Three: Digital Supply Chain Management
The supply chain today is a series of largely discrete, siloed (partitioned) steps taken through marketing, product development, manufacturing, and distribution, and finally into the hands of the customer. Digitization brings down those walls, and the chain becomes a completely integrated ecosystem that is fully transparent to all the players involved — from the suppliers of raw materials, components, and parts, to the transporters of those supplies and finished goods, and finally to the customers demanding fulfillment[15].
This network will depend on a number of key technologies: integrated planning and execution systems, logistics visibility, autonomous logistics, smart procurement and warehousing, spare parts management, and advanced analytics. The result will enable companies to react to disruptions in the supply chain, and even anticipate them, by fully modeling the network, creating “what-if” scenarios, and adjusting the supply chain in real time as conditions change. Once built — and the components are starting to be developed today
— the digital supply “network” will offer a new degree of resiliency and responsiveness enabling companies, that get their first to beat, the competition in the effort to provide customers with the most efficient and transparent service delivery[15].
I.4.1. Traditional SC model and digital SC model:
Current SCs have an accelerated life cycle and are in constant evolution; this evolution is driven by changes in the markets and emerging needs of the Fourth Industrial Revolution era. For this reason, new terms for digitalized SCs have been flourishing. This is the case for the “Digital Supply Chain” construct, referring to the evolution of how the current SCs are driven in Industry 4.0[16].
I.4.1.1. Traditional Supply chain :
Several SCM models have historically been defined by the most important scholars in this field. As an early work, we can mention the paper by Stevens (1989), who introduced one of the first schemes that allows an understanding of the materials and information that flow through the main components of the physical distribution channel such as suppliers, warehouses, factories, distribution warehouses and down to the final customers[15].
Other models that have studied and proposed essential SCM elements are the research works by Cooper et al. (1997) and those currently studied by Oettmeier and Hofmann (2016), who have proposed three general constructs[16](see Figure I-4-1)
• The Supply Cain Management components SCMCs: known as the managerial methods by which business processes are integrated and managed across the SC, e.g., work and organizational structures, information and communication structures;
• The Supply Chain Management Processes (SCMPs): referring to the activities that produce a specific value output to the customer, e.g., the customer and supplier relationship, demand and manufacturing flow management;
• The Supply Chain Network Structures (SCNS): described as the member firms and the links between those firms, e.g., upstream suppliers (tiers), services- party logistics and customers;
• The Supply Chain Flows (SCFs): are considered an important construct among the SCM elements, due to the relevant interconnection and systematic interaction provided through them and between each actor in the SCNS, e.g., products (goods) and services, information, knowledge and financial and return flows[16].
Figure I.4-1 Essential Constructs of Supply Chain Management (source: Digital Business Strategies)
I.4.1.2. Digitalized Supply chain :
• An intelligent, value driven network that leverages new approaches with technology and analytics to create new forms of revenue and business value, through a centric platform that captures and maximizes the utilization of real- time information emerging from a variety of sources[16]. (Kinnett, 2015)
• An intelligent best-fit technological system that is based on the capability of massive data disposal and excellent cooperation and communication for digital hardware, software, and networks to support and synchronize interaction between organizations by making services more valuable, accessible and affordable with consistent, agile and effective outcomes[17](Büyüközkan and Göçer, 2018), the table down-below (Table 1- 2) shows the differences between traditional supply chain and digitalized supply chain characteristics.
Table 2 Traditional vs digitalized supply chain main attributes (source: Digital supply chain model in industry 4.0)
Traditional Supply Chain Characteristics Digitalized Supply chain Characteristics Show a lineal and hierarchic interaction between
the SC structure without a real-time connectivity vision
Show a multi-dimensional, non-linear interaction among all of the elements within the DSC model:
management components, processes, network structure, and flows (Figure I-4-2)
Is designed to manage logistics activities and manufacturing operations
Are designed with a more acute knowledge of customer needs to response speed and the quality needed to satisfy real demands via digitalization, supporting the quick and easy return of these products at end of life
Lack of real knowledge of the return, risk, and value flows, or absence, of an optimal stream of them, among the SC components
Present new emerging flows sharing within the network structure, such as: risk flows, virtual value and real-time information, knowledge, money, virtual goods/services and returns flows
Lack of agility and flexibility Offer physical and/or digital goods and services
Focuses on mass production with low customization
Provide for their customers a centric platform that captures and maximizes virtual and physical value creation through a virtual and physical global value chain
Rapid response in well-defined target markets and when slow changes occur
Deliver mass, customized products and services ecosystem (digital and physical), through data mining and data trends, even predicting customer requirement lifecycles, adapting their operations to rapid and optimal responses
Has several or different communication and information systems that tend not to converge in one, or has problems updating information or achieving real-time communication
Use computational intelligence to develop machine-learning bots based on defined algorithms for self-learning, self-regulation and the autonomous generation of decision-making patterns
Great efforts to attain horizontal and vertical integration, but without reaching long-term agreements of real interdependence between the network structure
Keep open channels of communication, thus enhancing ethics, transparency and accountability
Commit to continuous innovation to improve the performance of its key components, mainly pursuing the endless invention of Industry 4.0 technology enablers and features Seek a circular economy strategy through the technology enablers of Industry 4.0 to reach sustainable operations management in the DSCs in products, production/processes, and logistics decisions
Figure I.4-2 The digitally enabled supply ecosystem vs. traditional linear supply chain (source: Pwc)
I.4.1.3. Smart supply chain enablers — success factors:
Companies setting out to build the smart supply chain face a difficult task, one that will likely prove impossible unless they develop a clear strategy that is fully responsive to the opportunities on offer in a fully digital environment. It must be based not just on the company’s current operations and business model but also on new business models available once digitization has been implemented, such as creating direct sales channels and leapfrogging levels in the value chain[18].
Once the strategy is determined, companies must put into place several key capabilities needed to carry it out, in addition to the supply chain applications. These key capabilities include the following:
• Processes: Establish the new end-to-end processes connecting suppliers and customers that digitization makes possible, such as how to collaborate on cloud- based platforms;
• Organization and skills: Generate an end-to-end understanding of the mechanics of the value chain. That means switching from a firefighter mentality, solving each problem as it pops up, to becoming a supply chain
“orchestrator” — seeing, managing, and optimizing the entire chain. Achieving this will also require a shift to an open, fast-learning digital culture that promotes communication across different media, programs, and user groups.
Develop the talent and expertise needed to build the technology and carry out the new supply chain operations;
• Performance management: Develop a set of straightforward business rules covering the management of the supply chain, and the key performance indicators needed to measure outcomes;
• Partnering: Focus on boosting the ability to partner with other companies, as the fully integrated supply chain cannot be built without collaborating with a wide variety of suppliers, distributors, and technology providers;
• Technology: Devise a road map for the many technologies, old and new, that will underpin the digital supply chain, including the information integration layer, database and analytics capabilities, and the cloud[18].
The goal of the digital supply chain is to fully integrate and make visible every aspect of the movement of goods. and If the vision of Industry 4.0 is to be realized, most companies’
processes must become more digitized. A critical element will be the evolution of traditional supply chains toward a connected, smart, and highly efficient supply chain ecosystem[18].
I.5. Section Four : Digital Supply Chain in Industry 4.0
As Digital Supply Chain DSC refers to the evolution of how the current SCs are driven in Industry 4.0, for many companies the supply chain is the business and it extends the vertical integration of all corporate functions to the horizontal dimension, knitting together relevant players — the suppliers of raw materials and parts, the production process itself, warehouses and distributors of finished products, and finally the customer — through a network of sensors and social technologies, overseen via a central control hub, and managed through an overarching data analytics engine[19]. In this section we will be defining first Industry 4.0, what is it and what is a digital ecosystem. We move then to Industry 4.0 objectives and famous characteristics of IoT, IoS, Cloud computing…etc.
I.5.1. Industry 4.0:
Industry 4.0, referred to as the “Fourth Industrial Revolution,” also known as “smart manufacturing,” “industrial internet,” or “integrated industry,” behind the great potential of the digital supply chain (DSC) lies Industry 4.0. Industry 4.0 orients itself on
includes the following phases: The idea of new products and services, the development and production/ realization, the delivery and also recycling.
A transformation in production and automation was brought on first by steam and water power (Industry 1.0), then by electrification (2.0), and more recently by the digital computer (3.0). Industry 4.0, digitization, is about companies orienting themselves to the customer through e-commerce, digital marketing, social media, and the customer experience[18].
Ultimately, virtually every aspect of business will be transformed through the vertical integration of research and development, manufacturing, marketing and sales, and other internal operations, and new business models based on these advances. In effect, we are evolving toward the complete digital ecosystem[18]. Table 1-3
I.5.1.1. Digital Ecosystem :
it will be based on full implementation of a wide range of digital technologies — the cloud, big data, the Internet of Things, 3D printing, augmented reality, and others.
Together, they are enabling new business models, the digitization of products and services, and the digitization and integration of every link in a company’s value chain:
the digital workplace, product development and innovation, engineering and manufacturing, distribution, and digital sales channels and customer relationship management[18].
I.5.1.2. Industry 4.0 Objectives :
Industry 4.0 is expected to enable factories to: Organize and control themselves autonomously, in a decentralized fashion and in real time (Brettel et al., 2014), reaching a state of multiple intelligent factories and smart manufacturing (Liboni et al., 2019; Lu, 2017). This system was previously envisioned by academics in Operations Management, that is a real global practice of a SCs integration, interconnected in real time, achieving optimal flexibility and responsiveness (Dallasega et al., 2018; Ryan et al., 2017; Stevens and Johnson, 2016; Tu et al., 2018a; Zhou et al., 2015)[18].
Table 3 The long road to industry 4.0, the digitalization of every aspect of business (source: PwC)
I.5.2. Characteristics of Industry 4.0:
There are nine characteristics of the fourth industrial revolution:
I.5.2.1. Cyber-Physical System (CPS) :
Industry 4.0 can be played as a Cyber-Physical System study where the advances and speed of development in communication and calculation form the Cyber-Physical System and Industry 4.0. Each production system of CPS has sensors installed in the entire physical aspects in order to connect the physical things with virtual models. Due to Cyber-Physical System to be more common in society and occurs during interaction with humans, it must be ensured that CPS behave stably and has a certain bearing when utilized with artificial intelligence (AI) (Mosterman & Zender, 2015).CPS is also the foundation to create the Internet of Things (IoT) which can be combined to become the Internet of Services (IoS).Hence, businesses will find it easier to establish global networks which joins the warehousing systems, machinery and production facilities of CPS in the future(He, 2016);
I.5.2.2. Internet of Things (IoT) :
Industry 4.0 is the new phrase for the combination of the present Internet of Things (IoT) technology and the manufacturing industry. Industry 4.0 was initiated as a result of the combination of the Internet of Things (IoT) and the Internet of Services (IoS) in the manufacturing process (Kagermann, Wahlster & Johannes (2013). Generally, IoT can provide advanced connectivity of systems, services, physical objects, enables object-to-object communication and data sharing. IoT can be achieved through the control and automation of aspects like heating, lighting, machining and remote monitoring in various industries (Zhong et al., 2017);
I.5.2.3. Internet of Services (IoS):
Internet of Services acts as important components in the automotive industry.
Activities are triggered through data transfers in the information technology to make daily mobility safer, easier and pleasant. The Internet of Services (IoS) acts as
“service vendors” to provide services through the internet according to the types of digitalization services. These services are available and on demand around business models, partners and any setup for services. The suppliers provide and aggregate the services into additional value services as communication among consumers can be received and accessed by them through various channels( Buxmann, Hess,
& Ruggaber, 2009);
I.5.2.4. Big Data Analytics:
Under Industry 4.0, big data analytics is beneficial for predictive manufacturing
